U.K. Retail Sales Increase as School Uniforms Boost Clothing

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U.K. retail sales increased in August, as purchases of school uniforms bolstered clothing. Food sales declined.

Volumes rose 0.2 percent from July, when they were unchanged, the Office for National Statistics said in London on Thursday. Excluding auto fuel, sales climbed 0.1 percent. Both numbers were in line with the median estimates in Bloomberg surveys of economists.

Zero inflation and the strongest wage growth in more than six years are putting money in the pockets of consumers and helping them drive the British economy. Bank of England Governor Mark Carney told lawmakers Wednesday that interest rates may need to rise from a record low in the new year if the economy continues to improve.

Clothing and footwear rose 2.3 percent in August from July, the ONS said. The increase helped to offset declines at department stores and household-goods retailers. Food sales fell 0.9 percent, which the statistics office said reflected a greater number of people taking vacations last month.

“The figures show that growth is coming evenly from both small and large retailers,” said Kate Davies, a statistician at the ONS. “Small stores were particularly boosted in August by sales of school uniforms, while most of the growth in large stores was coming from online.”

The pound was little changed at $1.5495 as of 9:37 a.m. London time, after touching $1.5529 on Wednesday, the highest since Aug. 26.

Cheaper Fuel

Sales of auto fuel rose 1.3 percent, as prices declined 2.9 percent on the month, the biggest drop since January.

From a year earlier, retail sales increased 3.7 percent and climbed 3.5 percent on an underlying basis. Both measures were 0.4 percent higher in the latest three months. A 0.5 percent decline in September would leave sales unchanged in the third quarter, the ONS said.

Retail sales account for 5.6 percent of the British economy, which has grown for 10 consecutive quarters.

Prices, as measured by the retail-sales deflator, fell 3.3 percent from a year earlier, driven by a 12.3 percent drop in fuel prices.

The data come as investors count down to the Federal Reserve’s latest policy decision, which may see the first U.S. rate boost in nearly a decade. Carney said Wednesday that the decision on when to increase U.K. rates from 0.5 percent will come “into much sharper relief” around the turn of the year.

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